MSPs: Avoiding the “No Decision” Deal
First, let's look at your challenge: Ninety days of sales eff
Anybody with a competitive bone in his or her body hates to lose a deal to the “other guy.” But while a loss to a peer MSP can drive anyone to a cold adult beverage, nothing stings like losing to a customer “no decision.” You know the scenario. Here are three ways to solve it.
First, let’s look at your challenge: Ninety days of sales effort, engineering design and financial analysis down the drain because you never got your value proposition across to a person who can sign the deal. The prospect did not buy from you – or anyone else. No one to point at but the person in the mirror – you beat yourself. Let’s revisit just a few of the tried and true sales maxims that can help avoid the “no decision.” What should any MSP do to qualify a prospect before putting on a full court press?
1. Don’t Be First
MSPs sell and deliver IT services. Preachers evangelize. In my own MSP sales experience the close rate for first time outsourcers was less than 10% vs. a more than 50% success rate for prospects with experience using third party managed services. It may sound arrogant, but the smart money takes a pass on opportunities with companies that have outsourced zero IT systems in the past. Ask the questions:
- Where is your website hosted?
- Do you run you own email system?
- Do you own your own data center or do you colocate?
Beware if the answer to all of the above is “we never have outsourced anything.” The term of endearment for companies like this is “server huggers.” With so much opportunity out there, what MSP can afford the cost of teaching Managed Services 101 to every prospect on every deal? There are dozens of blogs, analysts and advisors out there to help enterprises understand the economic and operational pros and cons of managed services. So let those guys evangelize the industry, while you stick to your knitting and close some business. In general, tread lightly with first timers and pour on the resources to win deals from companies with solid track records of contracting with MSPs.
2. Be Happy to See Your Competitors
I wish I had a dollar for every time I have been asked to “single source” a budgetary quote for managed services. This usually happened in the Q4 IT budgeting season when CEOs were putting the wood to their internal IT department by demanding that they evaluate outsourcing as a viable cost effective IT delivery strategy. Funny thing is these “single source” quotes never turned into business. We were just budgetary “column fodder” — a section on internal IT’s budget request used to justify increased headcount and infrastructure.
Because of this, we learned early on to be happy for competition in any deal. Good end user companies always evaluate multiple MSPs for best fit. When you see your competition in a bid, you know that the prospect has skin in the game, i.e. they are going through a managed evaluation process with criteria that you can measure your capabilities against. It also meant they have most likely crossed the river to make an outsource decision. Who wouldn’t take their best shot knowing a buying decision is going to made in a reasonable timeframe vs. the false comfort of the “single source” quote.
3. Call High
No Assistant Network Administrator has ever put pen to paper on a Managed Services Agreement. VPs sign them. CIOs sign them. So do CFOs and CEOs. So talk with them.
There is certainly nothing wrong or wasteful with a middle manager at prospective customer doing some initial discovery on your capabilities and experience. But before I’d commit the time and dollars to construct a full-blown proposal I would politely request, i.e. insist, on meeting the executive with the budget and authority to sign the deal.
I get mad at myself every time I think about the many times we got 75% through the sales cycle only to find out that we were 100% off from where the customer executive wanted to be! If for some reason your rank and file MSP reps have a hard time calling up the food chain – help them out. Drop an email and phone call into the VP or C-Level requesting a personal meeting to get their take on what the proposal needs to win. Find out about the competition, timeline, and ROI requirements so you can maximize your proposal’s impact. Keep the decision make involved every step of the way. When the guy or gal with the money fades from view, it is never a good thing.
Cost of Sales is a big line item in the MSP Income Statement. Effectively qualifying each opportunity is the key to not wasting money on the “no decision” deals.
Phil LaForge is VP and GM, service providers at Nimsoft. Monthly guest blogs such as this one are part of MSPmentor’s annual platinum sponsorship. Read all of Nimsoft’s guest blogs here.